Wananchi Opinion: Are Chamas a means of saving, or just rotating money

By Abol Kings

Chamas, also known as informal savings groups or investment groups, have become a deeply rooted part of Kenyan culture.

What began as small gatherings among friends, colleagues, and neighbours, has evolved into a widespread financial practice across the country.

From rural areas to urban centres, people form chamas to pool resources, support one another financially, and achieve collective goals.

On the surface, this seems like a powerful tool for financial empowerment. But a closer look raises an important question: are we actually saving and growing wealth, or are we simply rotating money without creating real financial value?

The strength of chamas lies in their social trust and simplicity. Members contribute regularly, often weekly or monthly, and take turns receiving a lump sum.

This system is especially popular because it encourages discipline and accountability among people who may not otherwise save.

The idea of knowing when it is your turn to receive money motivates members to contribute consistently.

In communities where, formal financial services are inaccessible or untrustworthy, chamas offer an alternative model that feels safer and more personal.

However, while the rotating model has benefits, it also has limitations that cannot be ignored.

For many chamas, especially those that operate purely on a merry-go-round system, there is little to no return on investment.

Members receive exactly what they put in, with no interest or added value. It becomes more of a delayed spending tool than a savings or investment mechanism.

In essence, the money is just circulating within the group, not growing.

This raises the concern that the primary function of some chamas is not saving in the true sense, but rather short-term financial relief.

Another concern is the lack of financial structure and knowledge in many chamas. Decisions are often made based on trust rather than informed financial planning. Bookkeeping may be poor or nonexistent, and accountability mechanisms may be weak. When mismanagement or internal conflict arises, members often suffer financial losses.

Stories of chamas breaking down over lost funds, dishonesty, or poor investments are all too common. This highlights the need for better training and professional support for these groups.

That said, some chamas have successfully evolved into investment vehicles. Groups that pool funds and invest in land, real estate, agribusiness, or stocks are creating real economic value.

These chamas tend to have more formal structures, defined leadership, written constitutions, and in some cases, financial advisors.

They operate almost like mini-investment firms. Such models demonstrate that chamas can go beyond rotating money and become engines of wealth creation.

The challenge is helping more chamas move in this direction. Education and capacity building are crucial.

Members need to understand the difference between saving for consumption and saving for investment.

They also need access to financial tools and training that can guide their decisions. Banks, microfinance institutions, and SACCOs have a role to play here.

Some are already offering tailored products and training for chamas, but more partnerships and outreach are needed.

Technology can also transform how chamas operate. Digital platforms that offer secure record keeping, automated contributions, and transparent reporting can reduce the risks of fraud or mismanagement.

These tools can also help chamas access credit, manage group finances more efficiently, and explore investment opportunities previously out of reach.

Ultimately, the chama culture reflects the Kenyan spirit of community, resilience, and innovation.

It shows how people come together to support each other financially in the absence of formal safety nets. But for this culture to truly uplift members economically, it must evolve.

It must move from simply rotating money to generating wealth. This requires a shift in mindset, better structures, and strategic guidance.

Mr. Abol Kepha Kings is a personal finance coach and a former banker